St. Jude's Q2 sales declines scale back 2012 expectations

First, the good news: St. Jude Medical ($STJ) experienced solid sales gains for its atrial fibrillation, neuromodulation and structural heart product lines during the company's 2012 second quarter that ended June 30. But exacerbated by unfavorable foreign currency exchange rates, nearly every other division--led by cardiac rhythm management--experienced sales declines.

Investors reacted accordingly, driving the company's stock price down over 4% in premarket trading.

Overall, St. Jude booked $1.41 billion in net sales during the second quarter, down 2% from the more than $1.44 billion the company took in over the same period last year. After adjusting for the impact of foreign currency, overall revenue actually increased a small amount--1%. The St. Paul, MN-based company's net earnings for the quarter reached $244 million, or 78 cents per share, up slightly from $241 million, or 72 cents per share over the same period in 2011.

St. Jude's president and CEO Daniel Starks said in a statement that the earnings "fell within our previously announced guidance ranges" and noted that the company continues to focus on "new product programs designed to accelerate our growth in 2013."

Future sales may rebound, but for now, St. Jude continues to see sluggishness in a number of areas. On the plus side, atrial fibrillation product sales soared to $218 million, a 5% hike over the same period in 2011. Neuromodulation also gave the company a genuine bright spot, with sales hitting the $106 million mark during the 2012 second-quarter, up 2% from the 2011 second-quarter.

But cardiac rhythm management sales continued their decline, dropping to $746 million during the 2012 second-quarter, a 6% decline compared to the fiscal 2011 second-quarter. Broken down, implantable cardioverter-defibrillator product sales dipped 4%, to $459 million, and pacemaker sales declined a whopping 9% during the quarter, versus the same period in 2011. Cardiovascular sales also declined slightly--by 1%--hitting the $340 million mark for the quarter. That breaks down to $180 million for vascular products (a 5% decline vs. 2011), and $160 million for structural heart product sales (a 5% hike).

- read the release
- check out Reuters' take
- here's the Wall Street Journal's coverage